Benchmark share indices ended nearly 1% lower on Wednesday as investors booked profits in rate sensitive shares after hopes of a rate cut remained elusive as inflation remained above the central bank's comfort zone.
The 30-share Sensex at the close was down 169 points or 0.85% at 19,818 and the Nifty gave up 55 points or 0.90% at 6,002.
The broader markets too cracked today, as both the smallcap and the midcap indices slipped 1.3% each.
After a flat opening, the markets continued to trade weak through the day as weakness in rate sensitives weighed on the indices.
Interest rate-sensitive fell as the Reserve Bank of India Governor D Subbarao stated that India's inflation has come off a peak but is still high, a comment that is likely to cool expectations for a rate cut later this month.
In Asia, shares fell on Wednesday as cautious investors waited for crucial economic data from China later this week, while the yen's extended gains spurred profit taking in Japanese equities after their recent rally.
Japan's benchmark Nikkei average shed 2.6% for its largest daily decline in eight months, sharply reversing Tuesday's rally.
The other major losers were Shanghai Composite and Taiwan Weighted down 0.7-0.8%.
Back home, on the sectoral front, all the indices except Oil & Gas, closed in the red.
Auto, Metal, Banks, Realty, Capital Goods, PSU and Power indices closed down 1% each.
Meanwhile, Oil & Gas index gained 0.3% on the back of gains in Reliance Industries [ Get Quote ] ahead of its Q3 numbers, which closed up 1.6% at Rs 859.50.
All the major auto scrips were in the red. Tata Motors [ Get Quote ] slipped over 3% after the company said that its global sales in December 2012 declined by 13.88% to 98,968 units against 114,920 units sold during the corresponding month in 2011.
Bajaj Auto [ Get Quote ] slipped 2% after reporting almost 100 basis point (bps) drop in operating margin for the third quarter ended December 2012 as compared to the previous corresponding period.
Mahindra & Mahindra, Maruti Suzuki and Hero MotoCorp down 0.5-3% each were the other major losers.
In the financial space, SBI [ Get Quote ], ICICI Bank [ Get Quote ], HDFC [ Get Quote ] and HDFC Bank gave off 1-2%.
Metal names like Jindal Steel, Hindalco [ Get Quote ] and Tata Steel [ Get Quote ] slipped 2-4%.
Some of the other losers among the Sensex-30 were BHEL, Tata Power [ Get Quote ], Sun Pharma [ Get Quote ], ONGC [ Get Quote ], L&T and Hindustan Unilever down 1-2%.
Among the gainers were Dr Reddys Lab, TCS [ Get Quote ] up 1% each followed by NTPC and Gail India [ Get Quote ] which added 0.2% each.
In other stocks, Strides Arcolab [ Get Quote ] gained nearly 2% at Rs 1,081, extending its over 3% gain in past two-days, on reports that Pfizer [ Get Quote ] Inc is among other companies in race to buy the company's injectable-medicines unit Agila Specialties.
Orient Refractories shot up 5.5% at Rs 38.75, after the Dutch firm Dutch US Holding B.V. made an open offer to acquire additional 26% stake in the company at price of Rs 43 per share.
The market breadth was negative. 1998 stocks declined while 942 stocks advanced on the BSE.